In Defense of General Dynamics
With all the earnings announcements, don't miss this company.
Asian stocks got a real smackdown overnight. The Hang Seng and the Nikkei were off 2.28% and 1.83%, respectively. European stocks were mixed early this morning. And here in the US, we're currently trading higher.
Here's what I'm seeing this morning:
General Dynamics (GD):
The defense company put up $1.48 a share from continuing ops in its third quarter. That was better than the $1.40 the Street was looking for
1. While I suspect there won't be a lot of people paying attention given the plethora of earnings that are out there today, General Dynamics deserves to be snuggled up to -- the beat was a good one. And in the release, the following line from its chief executive caught my eye: "Based on the strength of the third-quarter results, we are increasing our guidance for full-year 2009 earnings from continuing operations to $6.15 to $6.20 per share, fully diluted."
2. The company trades at about 10.4 times this year's estimate and kicks off a sweet little dividend.
3. The world is a dangerous place and odds are we're still going to need defense-related products in the future.
LSI Corporation (LSI):
The chipmaker was out with its third-quarter numbers. It put up $0.18 excluding items, which is leaps and bounds better than the $0.04 the Street was looking for. And for the fourth quarter, it's looking for $0.07 to $0.13, which isn't too shabby because the estimate I'm seeing is $0.06.
My two cents:
1. Clearly I see it as good news, and I think a couple of years out, the stock will be trading much higher than it is today. But that road could be a bit bumpy. I'd also argue that it's a bit hard to get excited about the $0.26 the Street is expecting for 2010, even if there could be some upside to that number.
2. If it gets to and stays above $5, I'd feel a lot more comfortable and might be willing to pull the trigger.
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